This document discusses construction contracts and equipment costs for an excavation project. The document contains information about a building project that requires 2000 cubic meters of excavation work. The equipment crew consists of one excavator rented at 700 LE per day and two trucks rented at 300 LE per day each. The crew's production rate is 200 cubic meters per day. The document then provides an example calculation to estimate the equipment cost per cubic meter for this excavation project. It calculates the contractor's fee under different total project cost scenarios for a target cost construction contract.

1. Ahmed Elyamany, PhD
November 7/10, 2010
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2.  During the construction of a building project,
quantities of excavation = 2000 m3
 Equipment crew consists of
1 Excavator with rental rate 700 LE/day
2 Trucks with rental rate 300 LE/day/one
 Production rate of crew 200 m3/day
Estimate the equipment cost /m3 for this
project.

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4.  By the end of this lecture, you will:
1. Differentiate between different types of
construction contracts.
2. Discuss the advantages and disadvantages
of construction contracts.
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5. 1. Price given in advance
1. Lump Sum
2. Schedule of rates
3. Unit price
2. Cost reimbursement
1. Target Cost
2. Cost + % fee
3. Cost + fixed fee
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6. BOQ
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8. BOQ
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9. BOQ
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16. Example:
The following information belong to a target cost contract:
Target cost = L.E. 160 M.
Cost at the start of target band = L.E. 155 M.
Cost at the end of target band = L.E. 165 M.
Target fee = L.E. 20 M
Cost saving share = 60/40, (60% by the client)
Cost increase share = 70/30, (70% by the contractor)
Required:
Calculate the contractor's fee for the following cases:
I. If the cost of project equals L.E 163 M.
II. If the cost of project equals L.E 177 M.
III. If the cost of project equals L.E 184M.
IV. If the cost of project equals L.E 140 M.
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17. Solution:
 If the cost of project equals L.E 163 M.
Contractor fee = 20M.
 If the cost of project equals L.E 177 M.
Contractor loss= (177-160)*0.7= 11.9M.
Contractor fee= 20-11.9=8.1M.
 If the cost of project equals L.E 184M.
Contractor loss= (184-160)*0.7= 16.8M.
Contractor fee= 20-16.8=3.2M.
 If the cost of project equals L.E 140 M.
Contractor excess= (160-140)*0.4= 8M.
Contractor fee= 20+8=28M.
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18. All Little
Information Information
required for required for
tender Control
Little All Owner Risk
Min Max
Contractor Risk
Max Min
Owner Control
Easy Hard
Control Effort
Min Max
Design Changes
Min Max
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19. 1.Fluctuating-price
2.Firm-price
Limited
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Full
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20. Questions?
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